Amp v Kien Dan Luu Pty Ltd & Ors No. DCCIV-97-9 Judgment No. D3775

[1998] SADC 3969

AUSTRALIAN MUTUAL PROVIDENT SOCIETY V KIEN DAN LUU PTY LTD, KIEN DAN LUU AND VLASSIA SOULA LUU

Civil
Judge Pirone

On the 25th day of February 1998 I published my findings in relation to this matter and my reasons for those findings.

In those reasons I said that the effect of my findings was that both the claim and the counterclaim had been proved, but that the net result would be judgment for the corporate defendant in the sum of $14,994, and judgment for the personal defendants in the sum of $600.  I did not enter final judgment on that occasion because I was anxious that the parties, and their representatives, should be afforded a reasonable opportunity to consider my reasons and, if possible, to file minutes, for orders to be made by consent in conformity with my reasons, as published.

I allowed the parties until close of business on Monday the 2nd day of March 1998 for that purpose and indicated that if, for whatever reason, they should be unable to agree, I would wish to hear further from counsel on any topic not covered in my reasons, and on which they would wish to address me, as well as, and in particular of course, on what precise orders should be made in conformity with those reasons.

The parties have been unable to reach agreement on some of the outstanding issues and the matter came back before me on the 4th day of March 1998 to resolve the dispute on those topics about which the parties remained deadlocked.

I heard arguments, and I received submissions, on that date but, because I had been referred to various authorities, I wanted an opportunity to re-read those authorities and consider the matter further.  With that purpose in mind, I adjourned to today in order to deliver my ruling on the unresolved questions, and to enter final judgment.

Each party claims interest on the judgment to which that party is entitled. Each party accepts that each of them is respectively entitled to interest, which should be calculated in accordance with the provisions of section 39 of the District Court Act. The parties are agreed on the rate at which such interest is to be paid, but remain deadlocked as to the date from which that interest should be calculated. I think that there is a simpler way in which the dispute may be resolved.

Sub-section 3 of Section 39 of the District Court Act provides that:-

“the Court may, without proceeding to calculate interest under subsection (2), award a lump sum instead of interest.”

I propose to exercise my discretion under that Section and accordingly, therefore, I propose to allow a lump sum in lieu of interest.

When fixing that lump sum I have borne in mind that, because the plaintiff’s claim is for a liquidated demand, the period from which interest should run is from when the liability to pay the amount of the claim fell due.  My findings on that topic are at pages 77-78 of my reasons.  In the case of the corporate defendant, I have borne in mind that its claim was for an unliquidated demand and that, whilst some of its damages became payable in September 1994, others, i.e. for loss of income, as assessed, accrued gradually over a period  of time from 28th September 1994 onwards.

With these considerations in mind, and after exercising my discretion in awarding a lump sum in lieu of interest, I now enter judgment as follows:-

1. With respect to the plaintiff’s claim there will be judgment for the plaintiff against the defendants in the sum of $23,750.00 inclusive of interest.

1. With respect to the counterclaim there will be judgment:

   a)Firstly for the personal defendants against the plaintiff in the sum of $750 inclusive of interest.

and

b)Secondly for the corporate defendant against the plaintiff in the sum of $41,200 inclusive of interest.

There will be an order that the corporate defendant’s judgment of $41,200 be offset, or set off, against the plaintiff’s judgment of $23,750 to the intent, and I order that, the plaintiff shall pay, or cause to be paid, to the corporate defendant the balance in the sum of $17,450.

In relation to the question of costs the parties have argued that question at length.  They have taken and maintain opposite extremes.

Whilst each party accepts that costs are in the discretion of the Court, each of them says, as Rule 101.02 makes plain, that subject to the Rules, and unless the Court orders otherwise, the costs of and incidental to a proceeding shall follow the event.  On that basis, therefore, the defendants accept that the plaintiff is entitled to its costs on the claim, and the plaintiff accepts that the defendants are entitled to their costs on the counterclaim, but, whereas the plaintiff contends that, in the circumstances of the case before me, the defendants ought to be deprived of some of their costs, and ought to be ordered to pay some of the plaintiff’s own costs, the defendants contend that no such order should be made, and further, that no adjustment should be made; that they are entitled to their costs in full, and that there are no grounds for the exercise of the Court’s discretion against them.

Mr. Tredrea says, and I accept of course, that the Court must act in accordance with the Rules of Court.  He points to subrule 3 of Rule 101.01 and says that, in exercising its discretion on costs, the matters to which the Court might have regard, are specifically stated in that subrule.  Those matters are:-

(a)     Payment into Court;

(b)     Offer to consent to judgment including a notice under Rule 41

and

(c)     Offer of contribution.

Mr. Tredrea says that none of the above matters are present in the case at bar and accordingly, therefore, that the defendants should not be deprived of any part of their costs and should not be ordered to pay any part of the plaintiff’s costs.

Mr. Rydon of counsel for the plaintiff took issue with that.  He began with the proposition that, as subrule 1 of Rule 101.01 makes clear, the costs of any party, the amount thereof, and the party by whom they are to be paid, are in the discretion of the Court.

I note in passing that the subrule is introduced by the words “notwithstanding the subsequent provisions of this rule”,which I interpret as meaning “notwithstanding the provisions of subrule 3” on which Mr Tredrea relies.  I also note, incidentally, that subrule 3 is an inclusive rather than an exclusive provision.  For these reasons, therefore, I reject Mr Tredrea’s submission and hold that, in appropriate circumstances and, in the exercise of its discretion, the Court may have regard to factors additional to those specifically referred in subrule 3 of Rule 101.01.  The position taken by Mr Tredrea is not supported by authority.  When dealing with the matter in Cretazzo v Lombardi 13 S.A.S.R. 4, for example, His Honour Bray CJ referred to the general discretion which is reposed in the Court and said at page 11:-

“Time and time again attempts have been made to fetter that general discretion by the imposition of judge-made rules.  Time and again those fetters have been released by appellate courts.  I think the guiding principle still stands as it left the House of Lords in the famous case of Donald Campbell & Co. V. Pollak [1927] A.C. 732, that the general discretion is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.”

His Honour went on to say at page 12:-

“It follows, therefore, that there is now jurisdiction to order a successful party, even a wholly successful party and whether plaintiff or defendant, to pay his opponent’s costs in part or in whole.  Of course, it by no means follows that it would be a judicial exercise of the discretion to do so and it may well be that in many cases it would not, since there must be some reason for departing from the settled practice whereby the successful party receives his costs from his opponent;  see Donald Campbell & Co. V. Pollak [1927] A.C. 732, per Viscount Cave LC at p. 812.”

In Cretazzo’s case (supra) His Honour the Chief Justice referred to yet another matter of importance and relevant for my purpose. What his Honour said at page 12 was this:-

“A successful party who has failed on certain issues may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent’s costs of them, and in this context ‘issue’ does not mean a precise issue in the technical pleading sense, but any disputed question of fact or, in my view, of law:  Foster v Farquhar [1893] 1 Q.B. 564, per Bowen L.J., as he then was, at p. 570. In fact in that case the plaintiff, who succeeded to a substantial extent, was deprived of his costs and ordered to pay the defendant’s costs in relation to certain specific disputed items of special damage on which he failed.”

I have used these principles as a guide.

In relation to the plaintiff’s claim, being as generous as I can be to the defendants, although the plaintiff has succeeded on its claim, it seems to me to be at least arguable, that what the defendants were really saying, in their defence, was that they were entitled to a set-off, which was greater than the claim, and accordingly, therefore, that there was no need for the plaintiff to bring its action.  On reflection, however, I do not think that I would be justified in making that ruling because, as my findings show, the defendants’ contention was that the advance was not to be repaid at all either because it was intended to be used, and was in fact used, to develop the agency, or even more incredulously because it was a gift from the plaintiff.

Having found against the defendants on each of those contentions, and on other issues raised by the defendants with respect to the claim, it seems to me that in the circumstances, and all other things being equal, there is no reason why the plaintiff should not have its full costs on the claim.  All other things, however, are not equal because, as I have found, the plaintiff was not entitled to reclaim and retain the registers without paying appropriate compensation.  Its own valuation of the registers was well in excess of the loan.  Its own contractual documents obliged it to negotiate (and it didn’t) and to pay a negotiated amount (and it didn’t).  It took the view, wrongly, as I have found, that the registers were valueless.  Although the plaintiff has indeed proved its claim, it has not succeeded on many issues.   But for the spurious contention advanced by the defendants, I would have been minded to exercise my discretion against the plaintiff.  In all the circumstances, I think that justice will be done, if I were to make an order that the plaintiff be awarded one half of its costs, and that is the percentage to which I have had regard in making my final order, as appears hereafter.

I now turn to the counterclaim.

The personal defendants have succeeded in their claim for loss of concessional home mortgage interest and there is no reason, in my view, why they should not have their costs with respect to that, and I so hold.

Similarly, however, the personal defendants have failed in their claim for damages for personal injuries, and, again there is no reason, as it seems to me, why the plaintiff should not have its costs of resisting that claim.  I propose to order accordingly.

In the case of the corporate defendant, the position is vastly different.

Prior to formally terminating the corporate defendant’s appointment as its agent, the plaintiff had complained on various occasions that the corporate defendant had not achieved, and was not maintaining, minimum standards of performance fixed by the plaintiff from time to time.  The plaintiff warned the defendant on various occasions that, unless minimum standards of performance were achieved by the corporate defendant within the stipulated time, its appointment with the plaintiff would be terminated on that basis.  The appointment was, in fact, terminated on that ground by letter dated 28 September 1994.

In its Statement of Claim the plaintiff did not allege that the corporate defendant was a non-performing agent and/or that its appointment had been terminated on that ground.  The plaintiff did not have to do so.  That fact, if it be a fact, and I have found that it was, was not part of the plaintiff’s case, nor was it a relevant matter for the purposes of its case, because, irrespective of the reason for terminating the appointment, the loan became repayable upon the occurrence of that event.  The reason for cessation of the agency was not a relevant consideration, because the loan had to be repaid irrespective of what was the reason for termination of the agency.

The question of performance standard, minimum earnings, retention rate, policy count and persistency, was first raised by the defendants in their defence and counterclaim.  It was their case at trial:-

(a)that there were no minimum standards of performance set by the plaintiff which the corporate defendant was required to achieve and/or to maintain,

or alternatively

(b)that if there were minimum standards of performance to be achieved and/or to be maintained by the corporate defendant, those standards had, in fact, been achieved and had been maintained by the corporate defendant;

and in the further alternative

(c)that if those minimum standards of performance had not been achieved and/or maintained by the corporate defendant, the corporate defendant’s failure to do so was caused, or had been induced by, the conduct of the plaintiff’s servant or agent, one Gary Leverington.

The defendants’ pleadings support the above contention.

I have found against the defendants on each of those contentions on the grounds referred in my reasons, and I did so after spending many days on hearing evidence and cross-examination on numerous documents dealing with the above topics and related matters.

True it is, as Mr. Tredrea submits on its behalf, that the corporate defendant has succeeded in its counterclaim for damages for breach of contract but its success was on the basis that, in terminating its appointment, the plaintiff did not follow the contractual counselling procedures which, at that time, were in existence and in force for that purpose.  Critically, for present purposes, that was an issue which was not raised, and was not led in chief, but as Mr Rydon points out, was raised only very late in the course of the proceedings.  Indeed I note that the defendant succeeded on that ground, only because of my acceptance of the evidence which was elicited from Mr Bieg in cross-examination.  I have reminded myself  that Mr Bieg was called by the plaintiff after the close of the defendants’ case, and only in rebuttal of the evidence which had been given by the defendants on some of the topics on which they relied, but on which they did not succeed.

When dealing with a similar situation in Gold v Patman & Fotheringham Ltd. [1958] 2 All E.R. 497 Hodson L.J., sitting as a member of the English Court of Appeal, ordered that the defendants obtain judgment against the plaintiff but that they should have only one half of their costs. His Lordship went on to say at page 503:-

“This is a course which the court does not often take, because, when a defendant has an action brought against him he is entitled to raise such defences as are available to him, but I think that in this case there was an opportunity for the defendants to take a clear-cut point of law which depended upon the construction of the document and on which this case has ultimately turned, and if that course had been taken a very large expenditure of money would have been saved.  On all the issues of fact which were raised by the defendants by calling evidence to prove or disprove certain facts, the learned judge in the court below found against them.  For these reasons I think this is a case in which the court is justified in taking an unusual course and not giving the successful party the whole of the fruits of his victory in the court below.”

These remarks are apposite to the case before me.  I have relied on these words and I have used them as a guide in arriving at my ultimate decision.

Before reaching my final conclusion on the appropriate orders that should be made, I have also had regard to what was said by Thomas J., sitting as a member of the Full Court, in the Queensland case of Colburt v Beard 1992 2 Qd. R. 67. His Honour referred to what Bowen L.J. had said in Forster v Farquhar & Others [1893] 1 Q.B. 564 at 569-570 and went on to say this at page 70 of the report:-

“In short Bowen L.J. favoured a discretion whereunder the court may identify heads of controversy as units of the litigation, and give directions to the taxing master in relation to them.  The identification of such units should not be circumscribed by limiting them to pleaders’ issues, courses of action or issues capable in themselves of leading to the grant of relief.  Such a view allows the court greater scope for framing costs orders to meet the justice of the particular case having regard to the way it was conducted.”

True it is, of course, that in making orders for costs the Court will not embark upon an examination of individual issues, where parties may, or may not, have been successful, with a view to determining what costs should be awarded, or as Jacobs J. said at page 16 of  Cretazzo’s case (supra):-

“.... I would wish to sound a note of cautious disapproval of applications, which are being made with increasing frequency, to apportion costs according only to the success or failure of one party or the other on the various issues of fact or law, which arise in the course of the trial.”

True it is also that, when dealing with a similar matter in Spargo v Haden Engineering Pty.Ltd. [1993] 60 SASR 39, Perry J., sitting as a member of the Full Court, cited with approval (at pages 57-58) what Jacobs J. had said in Cretazzo’s case (supra), but I have had some regard to the course suggested in Colburt’s case (supra) and I have used it as a tentative cross-check of the appropriateness of the order which I propose to make, after arriving at it by other, and legally acceptable, routes.

There are some other ancillary matters to which I must refer, because they are matters to which I have had regard in reaching my final conclusion.  They are as follows.

In his cross-examination of the plaintiff’s witness the male defendant had a tendency to make statements and/or speeches rather than to ask questions, despite my numerous attempts to urge him to do so.  He adopted the same stance when giving evidence but, interestingly, mainly in cross-examination.  He proved to be incapable, or unwilling, to give a straight answer to even the simplest of questions.  All of this resulted in an unnecessary lengthening of the trial.

In the course of the trial a dispute arose as to whether or not Ms Patrick had communicated with any of the plaintiff’s agents in an endeavour to facilitate the sale of the defendants’ registers.  Her evidence was that she had done so, and that she had provided those agents with the male defendant’s mobile telephone number.  Mr Luu took issue with that and contended that Ms Patrick did not do that, and could not possibly have done so, because she did not have the number of his mobile telephone.  Ms Patrick was recalled after making appropriate enquiries to prove otherwise, and she did prove otherwise to my complete satisfaction.  That, too, resulted in an unnecessary lengthening of the trial.

Before making formal orders there is another matter to which I must refer.  It is this.

There were various occasions, in the course of the trial, when the matter did not proceed as a result of the male defendant having applied for, and having obtained, an order adjourning the proceedings to another date on various grounds.  On each of those occasions, an application was made by Mr Rydon, on behalf of the plaintiff, for costs thrown away to be borne by the defendants in any event.  There were times when I did make orders to that effect.  Those orders, as made, are now confirmed.  There were other occasions, however, as for example, on 12th December 1997, when I made orders reserving the question of costs.  On that occasion I did so in relation to the application for an adjournment made by the male defendant with respect to that day, and also with respect to the adjournment which I had granted on 9th December 1997.

I note that on 8th December 1997 the matter was adjourned to enable the defendants to instruct new solicitors.  I note further that on 9th December 1997 the matter was further adjourned to 12th December 1997 for the same purpose, and on the grounds of alleged ill health.

Having referred to, and having disposed of, these other preliminary matters, and doing the best I can with the material before me, after carefully considering the submissions of counsel and the authorities to which I was referred, and in the exercise of my discretion, I now make the following orders with respect to the question of costs.

1. That the costs thrown away in consequence of the adjournment granted on 9th December 1997 be costs in the cause.

1. That the defendants pay, or cause to be paid, to the plaintiff, the costs thrown away in consequence of the adjournment, which was granted on 8th December 1997 and also, with respect to the adjournment which was granted on 12th December 1997.  I direct that such costs be agreed and in default of agreement that they be taxed.

1. That the personal defendants pay to the plaintiff the costs of and incidental to the personal defendant’s claim for damages for personal injury; such costs to be agreed, or in default of agreement, to be taxed.

1. There will be an order that the plaintiff’s total costs, as I have just awarded, and as they may be agreed or taxed, be set off or offset by the plaintiff against the personal defendant’s judgment of $750 to the intent, and I further order, that the shortfall, or surplus, as the case may be, shall be paid by the one bearing the shortfall to the one entitled to the surplus.

I must now deal with the balance of the costs of and incidental to the proceedings before me remaining after taking account of the orders which I have already made.

In dealing with that question I bear in mind that the plaintiff has succeeded on its claim and that the corporate defendant has succeeded on its counterclaim.  Because of that I have had regard inter alia to the provisions of Rule 48.03 of the District Court Rules.  That Rule provides that a counterclaim is a separate proceeding and goes on to say that:-

“.... the Court may

(b)     where a counterclaim is established against the claim of the plaintiff and there is a balance in favour of one of the parties, give judgment for the balance....”

and concludes by saying:-

“..... but nothing herein shall affect the Court’s discretion as to costs; ....”

I am mindful, of course, that, regardless of how judgment is entered, the order for costs should be framed in such a manner as to give a just result.  Childs v Blacker [1954] 2 All E.R. 243 and I bear in mind that, in the ordinary course, if both the claim and counterclaim succeed, the plaintiff and the defendant are each entitled to the costs incurred in their claim and counterclaim respectively. Provincial Bill Posting Co v. Low Moor Iron Company [1909] 2 K.B. 344. I also bear in mind the authorities which establish that, in taxing such costs, the claim is treated as if it stood alone, and the costs are awarded for maintaining it, whereas, in relation to the counterclaim, the only amounts awarded are for the increased costs occasioned by it, Medway Oil and Storage Company Limited v Continental Contractors Ltd. [1929] A.C. 88; Smith v Madden (1946) 73 C.L.R. 129.

When dealing with the question of costs and as to how the Court might exercise its discretion, where there is both a claim and counterclaim, the learned authors of Lunn on Civil Procedure in South Australia refer to Rule 48.03 and cite Foti v Banque Nationale de Paris (No 1) (1989) 54 SASR 354 in support of the proposition at page 8632 of volume 1 that:-

“Where neither party is wholly successful, the court in its discretion may order one party to have a percentage of its costs only; ....”

The reference to the case is incorrect.  It should be Foti & Ors v Banque Nationale de Paris unreported decision of Legoe J. handed down on 4th October 1989  Judgment No. 1808.

As it is evident from my findings neither party has been wholly successful before me.  For that reason, therefore, I propose to adopt and follow the approach to which I have just referred.

In doing that, and in making the order which, in the exercise of my discretion, I am about to make, I have had regard, and I have taken into account, the various matters to which I referred in my reasons for decision, published on 25th February 1998, and, in particular, to those to which I have referred in these supplementary reasons.

Having done that, and in the exercise of my discretion as aforesaid, I order that the plaintiff shall pay, or cause to be paid, to the corporate defendant, 50% of what I have called the balance of the costs of and incidental to the proceedings before me, remaining after taking account of the orders for costs already made, and direct that such costs be agreed, or in default of agreement, that they be taxed.

There will be a further order that, in relation to the plaintiff and the corporate defendant, the plaintiff shall be at liberty to offset the amount of all costs awarded in its favour, as agreed or taxed, against the costs otherwise payable, as ordered by the plaintiff,  to the corporate defendant.